On December 31, 2005, The Walsh Company had the following balances in its balance sheet accounts: Cash
Question:
On December 31, 2005, The Walsh Company had the following balances in its balance sheet accounts:
Cash ..................$ 98,000
Gross Accounts Receivables ..........$151,000
Allowance for Doubtful Accts .........$ 12,000
Prepaid Expenses (Taxes/Insurance) ......$ 30,000
Inventory ..................$689,000
Land ...................$195,000
Plant/Property/Equipment (PPE) .........$912,000
Accumulated Depreciation on PPE ........$613,000
Trade Accounts Payable ..........$123,000
Income Taxes Payable ............$230,000
Mortgage Notes Payable ...........$560,000
Other Long-Term Debt ...........$115,000
Retained Earnings .............$297,000
The following information pertains to the Walsh Company and its operations during calendar year 2006:
1. The company purchased $ 1,125,000 worth of inventory during the year, all on credit. Its ending inventory or 2006, totaled $ 667,000.
2. The company had sales totaled $1,900,000. All sales were on credit.
3. Company management assumed for the year that 1% of its credit sales would be uncollectible and recorded these credit sales as bad debt.
4. For the year, the company paid $1,150,000 total cash towards its trade accounts payable.
5. During the year, $30,000 worth of accounts receivable were determined to be uncollectible. (hint: accounts impacted here are “accounts receivable” and “reserve for doubtful accounts”.)
6. The company collected cash on accounts receivable totaling $1,890,000.
7. The company recognized $20,000 worth of property tax expense and $10,000 worth of insurance expense for the year. Both of these expenses had previously been recognized as prepaid expenses.
8. Salary expenses totaled $$190,000. Office expenses totaled $$55,000; and Selling/ Administrative Expenses totaled $89,000. All these expenses were paid with cash
9. Interest expense, paid with cash, totaled $70,000.
10. The company made principal payments of $45,000 on its mortgage note and $15,000 on other long-term debts it owes.
11. The company recognized $42,000 of straight-lined depreciation expense.
12. The company paid off its income taxes payable totaling $230,000 using cash.
13. The income tax expense for the year 2006 is $100,000. The 2006 income taxes will be paid in 2007. (2006 income taxes are recorded as “income taxes Payable” in 2006).
14. The company declared and paid $100,000 in cash dividends to its owners.
15. Net Income for 2006 is $158,000.
Using the information presented above and on the preceding page, complete the items below.
A) Prepare a properly formatted Balance Sheet for the Walsh Company dated December 31, 2005.
B) Determine the balance for “Cash” as of December 31. 2006.
C) Determine the balance for Retained Earnings for December 31, 2006.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis